Wow! To Kerry's Credit
Published in the September, 2004 issue of the Washington Monthly
Follow the Money: How John Kerry Busted the
Terrorists' Favorite Bank
by David Sirota and Jonathan Baskin
Two decades ago, the Bank of Credit and Commerce
International (BCCI) was a highly respected financial titan. In 1987,
when its subsidiary helped finance a deal involving Texas oilman
George W. Bush, the bank appeared to be a reputable institution, with
attractive branch offices, a traveler's check business, and a solid
reputation for financing international trade. It had high-powered
allies in Washington and boasted relationships with respected figures
around the world. All that changed in early 1988, when John Kerry,
then a young senator from Massachusetts, decided to probe the finances
of Latin American drug cartels. Over the next three years, Kerry
fought against intense opposition from vested interests at home and
abroad, from senior members of his own party; and from the Reagan and
Bush administrations, none of whom were eager to see him succeed.
By the end, Kerry had helped dismantle a massive
criminal enterprise and exposed the infrastructure of BCCI and its
affiliated institutions, a web that law enforcement officials today
acknowledge would become a model for international terrorist
financing. As Kerry's investigation revealed in the late 1980s and
early 1990s, BCCI was interested in more than just enriching its
clients--it had a fundamentally anti-Western mission. Among the stated
goals of its Pakistani founder were to "fight the evil influence of
the West," and finance Muslim terrorist organizations. In retrospect,
Kerry's investigation had uncovered an institution at the fulcrum of
America's first great post-Cold War security challenge.
More than a decade later, Kerry is his party's
nominee for president, and terrorist financing is anything but a
back-burner issue. The Bush campaign has settled on a new strategy for
attacking Kerry: Portray him as a do-nothing senator who's weak on
fighting terrorism. "After 19 years in the Senate, he's had thousands
of votes, but few signature achievements," President Bush charged
recently at a campaign rally in Pittsburgh; spin that's been echoed by
Bush's surrogates, conservative pundits, and mainstream reporters
alike, and by a steady barrage of campaign ads suggesting that the one
thing Kerry did do in Congress was prove he knew nothing about
terrorism. Ridiculing the senator for not mentioning al Qaeda in his
1997 book on terrorism, one ad asks: "How can John Kerry win a war [on
terror] if he doesn't know the enemy?"
If that line of attack has been effective, it's
partly because Kerry does not have a record like the chamber's
dealmakers such as Sens. Joe Lieberman (D-Conn.) or Orrin Hatch
(R-Utah). Though Kerry has been a key backer of bills on housing
reform, immigration, and the environment, there are indeed few pieces
of landmark legislation that owe their passage to Kerry.
But legislation is only one facet of a senator's
record. As the BCCI investigation shows, Kerry developed a very
different record of accomplishment--one often as vital, if not more
so, than passage of bills. Kerry's probe didn't create any popular new
governmental programs, reform the tax code, or eliminate bureaucratic
waste and fraud. Instead, he shrewdly used the Senate's oversight
powers to address the threat of terrorism well before it was in vogue,
and dismantled a key terrorist weapon. In the process, observers saw a
senator with tremendous fortitude, and a willingness to put the public
good ahead of his own career. Those qualities might be hard to
communicate to voters via one-line sound bites, but they would surely
aid Kerry as president in his attempts to battle the threat of
From drug lords to lobbyists
Despite having helmed the initial probe which led to
the Iran-Contra investigation, Kerry was left off the elite
Iran-Contra committee in 1987. As a consolation prize, the Democratic
leadership in Congress made Kerry the chairman of the Subcommittee on
Terrorism, Narcotics, and International Operations and told him to dig
into the Contra-drug connection. Kerry turned to BCCI early in the
second year of the probe when his investigators learned that
Panamanian strongman Manuel Noriega was laundering drug profits
through the bank on behalf of the Medellin cartel.
By March 1988, Kerry's subcommittee had obtained
permission from the Foreign Relations Committee to seek subpoenas for
both BCCI and individuals at the bank involved in handling Noriega's
assets, as well as those handling the accounts of others in Panama and
Colombia. Very quickly, though, Kerry faced a roadblock. Citing
concerns that the senator's requests would interfere with an ongoing
sting operation in Tampa, the Justice Department delayed the subpoenas
until 1988, at which point the subcommittee's mandate was running out.
BCCI, meanwhile, had its own connections. Prominent
figures with ties to the bank included former president Jimmy Carter's
budget director, Bert Lance, and a bevy of powerful Washington
lobbyists with close ties to President George H.W. Bush, a web of
influence that may have helped the bank evade previous investigations.
In 1985 and 1986, for instance, the Reagan administration launched no
investigation even after the CIA had sent reports to the Treasury,
Commerce, and State Departments bluntly describing the bank's role in
drug-money laundering and other illegal activities.
In the spring of 1989, Kerry hit another obstacle.
Foreign Relations Committee chairman Claiborne Pell (D-R.I.), under
pressure from both parties, formally asked Kerry to end his probe.
Worried the information he had collected would languish, Kerry quickly
dispatched investigator Jack Blum to present the information his
committee had found about BCCI's money-laundering operations to the
Justice Department. But according to Blum, the Justice Department
failed to follow up.
The young senator from Massachusetts, thus, faced a
difficult choice. Kerry could play ball with the establishment and
back away from BCCI, or he could stay focused on the public interest
and gamble his political reputation by pushing forward.
BCCI and the bluebloods
Kerry opted in 1989 to take the same information that
had been coldly received at the Justice Department and bring it to New
York District Attorney Robert Morgenthau, who agreed to begin a
criminal investigation of BCCI, based on Kerry's leads. Kerry also
continued to keep up the public pressure. In 1990, when the Bush
administration gave the bank a minor slap on the wrist for its money
laundering practices, Kerry went on national television to slam the
decision. "We send drug people to jail for the rest of their life," he
said, "and these guys who are bankers in the corporate world seem to
just walk away, and it's business as usual…When banks engage knowingly
in the laundering of money, they should be shut down. It's that
simple, it really is."
He would soon have a chance to turn his declarations
into action. In early 1991, the Justice Department concluded its Tampa
probe with a plea deal allowing BCCI officials to stay out of court.
At the same time, news reports indicated that Washington elder
statesman Clark Clifford might be indicted for defrauding bank
regulators and helping BCCI maintain a shell in the United States.
Kerry pounced, demanding (and winning) authorization
from the Foreign Relations Committee to open a broad investigation
into the bank in May 1991. Almost immediately, the senator faced a new
round of pressure to relent. Jacqueline Kennedy Onassis and Democratic
doyenne Pamela Harriman personally called Kerry to object, as did his
fellow senators. "What are you doing to my friend Clark Clifford?,"
staffers recalled them asking, according to The Washington Post. BCCI
itself hired an army of lawyers, PR specialists, and lobbyists,
including former members of Congress, to thwart the investigation.
But Kerry refused to back off, and his hearings began
to expose the ways in which international terrorism was financed. As
Kerry's subcommittee discovered, BCCI catered to many of the most
notorious tyrants and thugs of the late 20th century, including Iraqi
dictator Saddam Hussein, the heads of the Medellin cocaine cartel, and
Abu Nidal, the notorious Palestinian terrorist. According to the CIA,
it also did business with those who went on to lead al Qaeda.
And BCCI went beyond merely offering financial
assistance to dictators and terrorists: According to Time, the
operation itself was an elaborate fraud, replete with a "global
intelligence operation and a Mafia-like enforcement squad."
By July 1991, Kerry's work paid off. That month,
British and U.S. regulators finally responded to the evidence provided
by Kerry, Morgenthau, and a concurrent investigation by the Federal
Reserve. BCCI was shut down in seven countries, restricted in dozens
more, and served indictments for grand larceny, bribery, and money
laundering. The actions effectively put it out of business what
Morgenthau called, "one of the biggest criminal enterprises in world
Bin Laden's bankers
Kerry's record in the BCCI affair, of course,
contrasts sharply with Bush's. The current president's career as an
oilman was always marked by the kind of insider cronyism that Kerry
resisted. Even more startling, as a director of Texas-based Harken
Energy, Bush himself did business with BCCI-connected institutions
almost at the same time Kerry was fighting the bank. As The Wall
Street Journal reported in 1991, there was a "mosaic of BCCI
connections surrounding [Harken] since George W. Bush came on board."
In 1987, Bush secured a critical $25 million-loan from a bank the
Kerry Commission would later reveal to be a BCCI joint venture.
Certainly, Bush did not suspect BCCI had such questionable connections
at the time. But still, the president's history suggests his attacks
on Kerry's national-security credentials come from a position of
As the presidential campaign enters its final
stretch, Kerry's BCCI experience is important for two reasons. First,
it reveals Kerry's foresight in fighting terrorism that is critical
for any president in this age of asymmetrical threats. As The
Washington Post noted, "years before money laundering became a
centerpiece of antiterrorist efforts...Kerry crusaded for controls on
global money laundering in the name of national security."
Make no mistake about it, BCCI would have been a
player. A decade after Kerry helped shut the bank down, the CIA
discovered Osama bin Laden was among those with accounts at the bank.
A French intelligence report obtained by The Washington Post in 2002
identified dozens of companies and individuals who were involved with
BCCI and were found to be dealing with bin Laden after the bank
collapsed, and that the financial network operated by bin Laden today
"is similar to the network put in place in the 1980s by BCCI." As one
senior U.S. investigator said in 2002, "BCCI was the mother and father
of terrorist financing operations."
Second, the BCCI affair showed Kerry to be a
politician driven by a sense of mission, rather than expediency--even
when it meant ruffling feathers. Perhaps Sen. Hank Brown, the ranking
Republican on Kerry's subcommittee, put it best. "John Kerry was
willing to spearhead this difficult investigation," Brown said.
"Because many important members of his own party were involved in this
scandal, it was a distasteful subject for other committee and
subcommittee chairmen to investigate. They did not. John Kerry did."
David Sirota and Jonathan Baskin work for the
American Progress Action Fund, an advocacy organization in Washington,
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